K Wave Media (NASDAQ:KWM) vs. Sohu.com (NASDAQ:SOHU) Critical Analysis

Sohu.com (NASDAQ:SOHU) and K Wave Media (NASDAQ:KWM) are both small-cap communication services companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Profitability

This table compares Sohu.com and K Wave Media’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sohu.com	38.15%	21.63%	16.13%
K Wave Media	N/A	N/A	N/A

Risk and Volatility

Sohu.com has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500. Comparatively, K Wave Media has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Sohu.com and K Wave Media, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sohu.com	0	1	2	0	2.67
K Wave Media	1	0	0	0	1.00

Sohu.com currently has a consensus target price of $19.00, suggesting a potential upside of 31.03%. Given Sohu.com’s stronger consensus rating and higher probable upside, equities analysts clearly believe Sohu.com is more favorable than K Wave Media.

Valuation & Earnings

This table compares Sohu.com and K Wave Media”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sohu.com	$584.33 million	0.65	$394.10 million	$8.57	1.69
K Wave Media	$78.08 billion	0.00	N/A	N/A	N/A

Sohu.com has higher earnings, but lower revenue than K Wave Media.

Institutional & Insider Ownership

33.0% of Sohu.com shares are held by institutional investors. Comparatively, 62.2% of K Wave Media shares are held by institutional investors. 21.1% of Sohu.com shares are held by insiders. Comparatively, 65.1% of K Wave Media shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Sohu.com beats K Wave Media on 7 of the 11 factors compared between the two stocks.

About Sohu.com

Sohu.com Limited engages in the provision of online media, video, and game products and services on personal computers (PCs) and mobile devices in China. It operates through two segments: Sohu and Changyou. The company offers online news, information, and content services through the mobile phone application Sohu News APP, mobile portal m.sohu.com, and www.sohu.com for PCs; and online video content and services through mobile phone application Sohu Video APP and tv.sohu.com, as well as ifox, a video application for PC. It also operates Focus (www.focus.cn), which provides online real estate information and services; and 17173.com website, which provides news, electronic forums, online videos, and other online game information services to game players, as well as offers mobile game distribution services. In addition, the company offers interactive online games for PCs and mobile devices. Further, it provides paid subscription and interactive broadcasting services. The company was incorporated in 1996 and is headquartered in Beijing, China.

About K Wave Media

K Wave Media engaged in the entertainment content and IP creation businesses. K Wave Media, formerly known as Global Star Acquisition Inc., is based in NEW YORK.